Analyse the product adoption lifecycle for Music streaming services in India
The transition from feature phones to smartphones, the data rates being the cheapest in the world, coupled with the fact that Indian consumers spend 21.58 hours per week listening to music (surpassing the global average of 17.89 hours a week), there are a myriad factors bolstering the growth of the Indian music streaming market.
With the recent advent of global players like Spotify and YouTube Music in the fray, the music streaming market is transitioning from its infancy stage and is poised to grow further, according to industry players and experts. Personalisation and localisation seem to be the growth drivers now.
According to a report by Statista, revenue in the music streaming industry in India amounts to $213 million with 89.6 million users. This revenue is expected to grow annually at a rate of 1.6 per cent between 2019–2023 which will take the amount to $227 million. User penetration streaming wise is expected to reach 7.0 per cent by 2023 which currently stands at 6.5 per cent in 2019.
With the increase in the numbers of subscribers every day, top music streaming platforms like Apple Music, Spotify, Wynk Tube, JioSaavn etc are coming up with new plans and schemes to lure the customers.
Where does the music streaming industry fit in the Product Adoption lifecycle?
Consumers adopt technology in highly predictable ways. First come the early adopters, the tech aficionados who are always the first to try out new apps, services and devices, next come the early followers who supercharge growth, then the mainstream who bring scale of adoption and finally the laggards who adopt at a more measured pace and slow growth. The result is an ‘S-Curve’ of adoption, with slow growth followed by fast growth, followed by slow growth again at the top of the curve. Music services are no exception, usually starting slowly before accelerating and then slowing again when they have saturated their addressable audience. Exactly where growth peaks varies by service and is determined by the type of service, but the same shape of adoption curve plays out nonetheless, most of the time.
Profiles of adopters in music streaming industry
The Indian music streaming market has now reached a level of maturation where most established players have crossed “the chasm” in the product adoption curve, which in product management parlance means a crossover zone from an early stage, failure-prone product and to a successful one. Thus, the overall propensity to fail is quite low but the new players still have to conquer the early market.
Innovators: The first set of people to use your product. They usually include open beta testers, tech reviewers and internet enthusiasts who keep a tab on the music space and are the first ones to test new products.
Early Adopters: These are usually audiophiles and music aficionados who are passionate about music streaming in general and wish to experience any new product that launches in this sector. These users are typically younger in age, have a higher social status, have more financial ability, advanced education, and are more socially forward.
Early Majority: These are users who usually look for tried and tested options with proven value. They are influenced by the blogs and reviews posted by the Innovators & Early Adopters. They are mostly tech-savvy millennials who own smartphones and audio gadgets, wouldn’t mind paying a subscription fee and have a penchant for the latest global music trends. They form a significant chunk of the user base.
Late Majority: These are people with a high degree of skepticism and who wait until a majority of society has adopted the product. They need more convincing than just good reviews of a new product. They won’t easily adopt a new product until they have a real need for it or there are no other alternatives and are convinced it’s of great value.
Laggards: These are people who are are typically averse to change and are the last ones to adopt a product. They are mostly advanced in age, stick to old technology and traditions or have low social status and financial fluidity.
Note: It is important to realize that, as with any generalization, not all members of a class of adopter will conform to the general patterns of that class. There will be high-income, well-educated, risk-taking, laggards as well as low-income, poorly-educated, non-thought leader early adopters. There are also plenty of older people familiar with technology. These categories are useful for generic planning for market entry and should not be used to stereotype individuals.
Factors and challenges which affected the rate of music streaming service adoption
Internet adoption in India still in progress -While the telecom revolution has opened the door for the online economy, the process of internet adoption is far from over.Current “566 million internet users” still represent just south of 40% of the country’s total population — while penetration rates across developed markets average at around 80%.
Streaming Alternatives -According to Nielsen, 94% of the online consumers in India listen to music — and 71% of them say that music is an important (or very important) part of their lives. If that’s the case, however, why the music streaming user base made up only 26% of the country’s online population back in 2018? The point is that streaming services are just one of the consumption channels available to the Indian consumer and not necessarily the most attractive one.
The most prominent audio streaming alternative is YouTube. Video-streaming heavyweight has become a massive part of the country’s entertainment landscape. Reportedly, YouTube reaches over 80% of the online users in India, and 245 million Indians are accessing the service every month.
The reason behind the platform’s success as a music consumption channel is the significance of video-synced music content in the country. Shaped by a century-long tradition of film music, Indian consumers are used to consuming audio synched to video content and built into the bigger cinematic narrative.
YouTube is free, visual, and easily accessible. However, it can’t wholly substitute streaming services, since music is an off-screen, on-the-go content and video-platforms are not cut out for that.
Pirate Services — When it comes to off-screen consumption, the biggest streaming alternative is pirate services. Currently, India is the first country in the world in terms of piracy rates. According to the latest surveys, 76% of internet users admit to using pirate services in the last three months — and by far the most popular unlicensed channel are the stream-ripping websites, allowing their users to turn the YouTube links into mp3 files. Then, the mp3 files can be easily “sideloaded” onto the Android-operated devices (which account for over 90% of all smartphones in India) through external SD-cards.
Source: Digital Music Study 2018
Monetization -Sure, “pirates” will eventually convert to ad-supported streaming users but turning them into paying customers is a massive challenge for the local industry. Another factor that plays into that situation is the price-sensitivity of the Indian consumer in general. Consumers in India are dubbed value-conscious — always keeping in mind the value/price proposition. However, if the music was free for the past ten years, why should you pay for it?
The prominence of video-content, the popularity of YouTube, the history of rampant piracy, all those factors make a conversion to paid streaming extremely problematic, even though the subscriptions are priced extremely cheap.
However, even with the prices slashed down, conversion remains dismal. To draw parallels with China once again, the average subscription rate there is thought to be record-low at just 3%. Well, if we look over at India, only 1% of all streaming users pay for premium subscriptions directly.
Growth and product adoption comparison with other music streaming services
Source: Deloitte, IFPI
Growth hacks used
The freemium, ad-supported models used by JioSaavn, Gaana, Spotify and Youtube Music alleviate to a large extent the hesitation of price-sensitive Indian users towards paid subscriptions. The value proposition of listening to any song on-demand for free has proved irresistible.
After a trial period, many users do get enticed into signing up for premium features like higher quality ad-free music, unlimited skips, non-shuffled play and offline listening. Also, these hacks help in combating piracy as users get free access to huge music libraries in a hassle-free way.
Case Study: Spotify
Spotify is a digital music streaming service that gives you access to millions of songs, podcasts and videos from artists all over the world. Spotify, available in both free and premium versions, remains a top-tier streaming music thanks to its deep library, collaborative playlists, early album access, and podcasts. The company reported a gross profit of $490 million on about $1.92 billion revenue, marking just the second time Spotify has been in the green as a public company.
Here are 3 growth hacks Spotify uses in brand strategy
Partner Up — Spotify & Starbucks -In 2016 Starbucks and Spotify became partners.The goal of this partnership was to drive listenership to the streaming service and allow the chain coffee shops’ customers to easily engage with music played at its 7,500 locations. Through the Starbucks app, via location sharing, customers were able to favourite and add the music playing during a visit to a store. They were also able to influence Starbucks’ future in-store playlists. Customers who purchased Spotify’s streaming packages were also eligible to earn more rewards points, which could have been redeemed for free beverages.
Piggyback on a thriving network — Spotify & Facebook Messenger — In 2016, Spotify integrated with Facebook Messenger allowing people to share their Spotify songs or playlists directly within a chatbox. Because each track, album and playlist has a unique URL, Spotify is sharing-friendly.This integration accelerated Spotify’s growth through referral traffic.
Data-driven & User-Generated Content -Using their data insights about users’ listening habits, Spotify put together their best ad campaign so far.The campaign is called Thanks 2016, it’s been weird, it was released in October 2016 and featured outdoor billboards containing funny messages based on the weird, wonderful and emotional playlists Spotify users had created.
During the course of the campaign’s run, Spotify subscription growth easily broke all company records.
Summary
All the music streaming services in India, like the west, market themselves to consumers on the convince model by advertising access to millions of songs and offline listening for a monthly price. However, the Indian consumers’ mindset is different from the west. “Indian consumers love convenience as long as they don’t have to pay for it. They will live with the pain of the slight inconvenience of getting things from the alternate source, if it saves them money.”
Piracy is another concern in this industry. Hence strategic approaches need to be come up to tackle it.
Over time, consumers get comfortable with apps and the user experience and familiarity is a great advantage for the early entrants. Also, the apps over time with the smart use of AI are able to curate playlists basis consumers choice. Consumers will get sticky with apps who are able to serve them customized music. Apps that do this well and help sharing lists seamlessly with friends will build loyalty and long term advantage.
